The Fed can raise and lower interest rates (by raising or lowering the Fed Funds Rate). Why would the Fed choose to increase the Fed Funds Rate? Group of answer choices During inflationary times, there are too few goods and too much demand for goods. By raising interest rates, demand for goods goes down and so does inflation. The Fed raises interest rates as the US proves that it is not as creditworthy as it should be. Raising rates means people will buy more goods and thus boost the economy